[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Factories shut after July uprising struggle to reopen

Mills and factories that were vandalised, ransacked or set ablaze during and after the July uprising have been struggling to reopen due to financial crises, unavailability of bank loans and their politically exposed owners facing legal consequences.

www.thedailystar.net

Factories shut after July uprising struggle to reopen

Mills and factories that were vandalised, ransacked or set ablaze during and after the July uprising have been struggling to reopen due to financial crises, unavailability of bank loans and their politically exposed owners facing legal consequences.

Nearly 1 lakh workers were employed in these production lines, many of which now remain closed, leaving employees to bear the brunt of the disruptions.

These attacks took place following the political changeover in August last year and during labour unrest from July to October last year.

As the industries have not been in operation for the past seven months, banks are not allowing these production units to open letters of credit (LCs) or seek loan rescheduling facilities, forcing them to endure a severe shortage of working capital.

Moreover, the owners of these industrial units are either in jail or have fled abroad due to their political ties to the previous Awami League government.

Major affected factories include 14 textile and garment factories of Beximco Group, five tyre factories of Gazi Group, three plastic factories of Bengal Group and several garment factories in Ashulia, Savar, Zirabo and Zirani.

The Daily Star spoke to members of the senior management of some affected factories, including Gazi Group.

Muhammad Fakhrul Islam, executive director (finance) of Gazi Group, said they have begun reconstructing the factories with plans to reopen within the next three to four months.

The group has been trying to reschedule a Tk 1,800 crore bank loan to resume operations. "Once we restart the business, repayment of the loan will be easy," Islam said.

Losses from the burning and looting of five Gazi Group factories in Rupganj of Narayanganj in August last year amounted to over Tk 2,000 crore.

The factories of Gazi Tyre, Gazi Tank, Gazi Pipe, Gazi Door and several warehouses were destroyed, allegedly owing to the political influence of Golam Dastagir Gazi, former minister of textiles and jute, who is now in jail.

In the case of Beximco Group, the government is set to make the final wage and service benefit payments totalling Tk 525.46 crore to 31,669 workers and 1,565 officials from March 9.

Following the ouster of the Awami League government in early August last year, Beximco Group found itself in hot water.

Its Vice-Chairman Salman F Rahman, who is now behind bars, was an influential adviser to deposed prime minister Sheikh Hasina. He faces charges of murder, graft, and using political influence for personal business gain.

After the fall of the Awami League, financial irregularities linked to Rahman and his business empire came to light, with Beximco Group's bad loans amounting to at least Tk 40,000 crore.

Top officials of the now cash-strapped group said they have repeatedly requested the government to allow them to open back-to-back LCs to resume business on a limited scale.

Khalid Shahrior, head of human resources (HR) and compliance for Beximco Group's textile and garment division, said, "It is important to run the factories, regardless of who owns them, to save the employees and their families.

"Despite multiple requests, the government has not permitted the business to resume," he said.

Meanwhile, Md Jashim Uddin, vice-chairman of Bengal Group, said three factories producing plastic goods, cement bags, packaging materials, and the group's central warehouse were burned down in August last year.

More than 2,000 workers were employed in these Zirani-based units, generating Tk 80 crore in monthly revenue.

Jashim Uddin, also a former president of the Federation of Bangladesh Chambers of Commerce and Industry, said he needs to reschedule Tk 400 crore in bank loans as he plans to rebuild factories and buy new machinery.

Syed Rezaul Hossain Kazi, managing director of Big Boss, an export-oriented garment factory, said his factory incurred a Tk 60 crore loss in post-August damages.

The factory managed to resume production within days as the losses were covered by insurance.

Currently, 12,000 workers are employed at Big Boss, and Kazi said he did not face major issues with loan repayment as his factory restarted operations.

However, many affected garment factories were unable to do the same.

For example, at least four garment factories that were severely damaged have not resumed production, said Mohiuddin Rubel, former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He declined to name these factories, saying they "were not allowed to reopen due to political reasons".

AHM Shafiquzzaman, secretary to the Ministry of Labour and Employment, said the government has provided Tk 127 crore in primary financial support to five companies, including Birds, Dird, Yellow of Beximco and TNZ.

However, he said the government is now pressuring these companies to repay the loans as the six-month tenure is coming to an end.

"If they fail to repay the loans on time, the government will attempt to sell the properties these companies used as collateral when borrowing," he said, adding that some units are operational and capable of repaying their debts.

Almost all affected garment factories have resumed operations, except for a few whose owners are either abroad or burdened with high outstanding loans, said Md Anwar Hossain, administrator at BGMEA.

Besides, some factories have remained shut since July last year, due mainly to financial losses from production halts caused by labour unrest and vandalism, he said.

Brigadier General (Rtd) M Sakhawat Hussain, adviser to the Ministry of Labour and Employment, said his ministry has worked on labour issues with many factories and provided financial aid to some to pay wages.

However, providing financial support to all affected factories is not possible due to their outstanding bank loans, he said. "Still, if any factory approaches the ministry, we will try to assist."

Regarding the government's financial support for workers' wages and benefits, he said it was done on humanitarian grounds, as selling shares of these companies is complex and time-consuming.

He also said that Beximco Group's default loans are too high for the government to risk major financial intervention to restart its operations.​

 

[Saif]

Augmenting export earnings

Before apportioning blame to others, the businesspeople in the sector should pay a greater attention to bring its own house in order A 10.53 per cent rise in the country's export earnings to $32.94 billion in the first eight months of the current fiscal year on the back of an augmented rem

thefinancialexpress.com.bd

Augmenting export earnings
FE
Published :
Mar 05, 2025 23:17
Updated :
Mar 05, 2025 23:17

Before apportioning blame to others, the businesspeople in the sector should pay a greater attention to bring its own house in order

A 10.53 per cent rise in the country's export earnings to $32.94 billion in the first eight months of the current fiscal year on the back of an augmented remittance received during the same period provides a sense of relief at the time the economy is wobbling. Even the export earnings for this February recorded a 2.27 per cent year-on-year increase to US$3.97 billion compared with US$3.86 billion in the same month the previous year. Not surprisingly, the number one export commodity of the country, readymade garment (RMG) led the way by recording a 10.64 per cent growth. Taking into account the single month's export growth for February, the knitwear sub-sector registered a growth of 1.66 per cent to $3.24 billion compared to the same month the previous year. However, the woven garment articles experienced a slightly negative growth at 0.44 per cent.

The overall export growth during the first eight months of the fiscal year 2024-25, according to the sector's businesspeople, is a proof of the country's 'resilience and competitiveness on the global export market'. It is so because, the sector has defied the labour unrest, scarcity of gas and a lack of cooperation from banks. So far as labour unrest is concerned, it is the dark horses in the sector which have actually perpetuated the problem. With the highest number of leadership in energy and environmental design (LEED)-certified RMG green factories at 235 in the world by January 25, 2025, the country should have been in the forefront of receiving orders and other supports from the international buying platforms like the Alliance and Accord. Both of them played a pivotal role in transforming the safety standard of garment factories here and also transitioning into the green status. But unfortunately, the same impetus is lacking in matters of placing orders, offering higher prices commensurate with the improved status in workplace safety and helping market commodities produced in these factories.

Garment units must take the blame for not streamlining recruitment policies and procedures and solving the endemic labour unrest. Had these fundamental issues been addressed on a priority basis, even the last year's political unrest would not have left an adverse impact so telling. Vietnam has made tremendous gains from the Western world's China-bashing policy and even India has grabbed a good slice of the global garment business. So, before apportioning blame to others, the businesspeople in the sector should pay a greater attention to bring its own house in order. Together with upscaling products, the systemic improvement can help fetch far higher amounts of forex.

Finally, the reliance on RMG for foreign exchange earnings is overwhelming. Export diversity focusing on leather, pharmaceuticals, frozen fish, processed foods, plastic products---all of which have high potential---is the name of the game for raising income from export in a competitive world. Apart from the unskilled, semi-skilled and skilled workers the country is used to sending abroad, it is time to push for placement of professionals in the high-end job market. In this context, the graduates and masters in technology-based subjects such as computer science, IT, physics, applied physics should be targeted for their employment abroad. Countries like Germany and Japan with aging populations need such professionals on an emergency basis. Bangladesh must seize the opportunity to boost its hard currency earning.​

 

[Saif]

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers’ purchasing power.

www.thedailystar.net

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers' purchasing power.

Last month, the Consumer Price Index (CPI), which measures changes over time in the prices paid by consumers, dropped to 9.32 percent from January's 9.94 percent, according to data released yesterday by the Bangladesh Bureau of Statistics (BBS).

Inflation has persisted above 9 percent since March 2023.

Last July, consumer prices witnessed the sharpest jump in 14 years, hitting 11.66 percent, data from the statistical agency showed.

The latest drop was mainly driven by a reduction in food inflation, which stood at 9.24 percent in February, down from 10.72 percent the previous month.

However, non-food inflation showed an upward trend, increasing to 9.38 percent in February from 9.32 percent in January, indicating that services continue to put pressure on household budgets.

"The easing of inflation reflects the increased supply of commodities in the kitchen market," said Prof Selim Raihan, executive director at the South Asian Network on Economic Modeling, a think tank.

The availability of winter vegetables and certain spices has played a positive role in the commodity market, contributing to reductions in food inflation, he said.

"This situation clearly shows what we have been saying for a long time—that supply-side issues are a major driver of our inflation," Raihan said, adding that such problems could not be addressed solely through monetary policy.

However, he remained unsure about the trend, saying inflation above 9 percent is still very high.

"I am still not confident that inflation has declined due to policy measures. The seasonal effect will fade, and prices may rise again," he said.

"Once the seasonal supply diminishes, market prices will increase unless we address the fundamental causes of inflation and ensure proper coordination between monetary policy, fiscal policy, and market supply," he warned.

According to Raihan, the decline in inflation has been marginal.

"If you look at major commodities such as rice, lentils, oil, chicken, beef, and fish, prices have not decreased. In some cases, they have even increased," he said.

"From this perspective, I am not confident that we are taking enough steps to combat inflation."

However, Ashikur Rahman, principal economist of the Policy Research Institute of Bangladesh, believes that the government's contractionary monetary policy has played a role in this reduction.

"The contractionary monetary policy, along with a significant jump in imports, has played a role in easing inflation," he said.

There was a significant increase in imports during December and January, he said, adding that the relaxation of import policies over the past three months has shown good results, reducing supply chain disruptions.

"Now, Bangladesh Bank may not have strong justification to further raise policy rates. If this trend continues, we might see a slight reduction in the policy rate by June," he said.

Currently, the policy rate stands at 10 percent. In the last monetary policy statement, the central bank refrained from any further hikes after witnessing a declining trend in inflation since December.

However, Rahman warned that electricity supply remains a major challenge ahead.

"If the electricity supply remains stable and agricultural output performs well, keeping inflation below double digits would be a positive outcome."

So, the government needs to effectively manage supply chain disruptions and ensure stability in the power sector to improve the overall situation, he said.​

 

[Saif]

US top remittance source in February

Bangladeshi expatriates in the United States (US) sent home the highest remittance amounting to US$491.26 million in February, according to Bangladesh Bank (BB) data. Following the political changeover in August, remittance inflows from the US have seen a significant rise, enabling the US to surpa

thefinancialexpress.com.bd

US top remittance source in February
BSS
Published :
Mar 06, 2025 19:42
Updated :
Mar 06, 2025 19:42

Bangladeshi expatriates in the United States (US) sent home the highest remittance amounting to US$491.26 million in February, according to Bangladesh Bank (BB) data.

Following the political changeover in August, remittance inflows from the US have seen a significant rise, enabling the US to surpass the United Arab Emirates (UAE), which had long been the leading source of expatriate income.

The UAE was in the second position with a total of $334.94 million in remittances sent to Bangladesh in the previous month.

The expatriates in the Kingdom of Saudi Arabia (KSA), the country which hosts most of the Bangladeshi migrant workers, sent around $328.84 million in remittances, putting the country in third place.

Bangladesh received $305.52 million in remittances from the expatriates in United Kingdom, making it the fourth-highest remittance sender in the month, while Malaysia was in the fifth position as expatriate from Malaysia sent $183.87 million remittances in February.

The other top 10 countries for sending remittances to Bangladesh are Kuwait, Oman, Italy, Qatar, and Singapore in that order.

According to the latest BB data, Expatriate Bangladeshis sent US$2,528 million remittances in February, which was around 25 per cent higher than the corresponding month of the previous year.

The wage earners sent $2,022 million remittance to the country in February of 2024.

With the latest addition, the year-on-year growth in receiving remittances increased at 23.8 per cent for the first eight months, July to February, of the ongoing fiscal year (FY25) as the country received $18,490 million in total during the period. Last year, it was $14,935 million.

BB said in its monthly report on remittance inflows that in the current political and economic landscape, marked by inflationary pressures, exchange rate fluctuations, and rising import costs, remittances have provided much-needed relief.

The foreign currencies bolstered foreign currency reserves and supported millions of households across the country, it said.

“The steady flow of remittances has been a stabilising factor, contributing to poverty reduction, improved living standards, and regional development,” said the report.

“In the context of the ongoing economic recovery post-pandemic, coupled with political transitions, remittances are even more critical in sustaining economic growth, ensuring liquidity in the banking sector, and reducing reliance on external borrowing,” it added.

The United Arab Emirates (UAE) was the largest source of remittance during this period, followed by the US.

The report said inward remittances from Bangladeshi expatriates are very significant for the nation... Expatriates’ remittances are one of the largest sources of foreign currency.

The BB suggested targeted strategies to support the migrant workforce, enhance the economic benefits of remittances, improve the financial inclusion of recipients, and address the needs of migrant workers abroad.

Talking to BSS, Deputy Managing Director (DMD) of the Premier Bank PLC Abdul Quaium Chowdhury said the flow of remittances into the country shows upward trend as the government has taken measures to streamline the legal channel for encouraging non-resident Bangladeshis (NRBs) to send money to the country.​

 

[Saif]

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers’ purchasing power.

www.thedailystar.net

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers' purchasing power.

Last month, the Consumer Price Index (CPI), which measures changes over time in the prices paid by consumers, dropped to 9.32 percent from January's 9.94 percent, according to data released yesterday by the Bangladesh Bureau of Statistics (BBS).

Inflation has persisted above 9 percent since March 2023.

Last July, consumer prices witnessed the sharpest jump in 14 years, hitting 11.66 percent, data from the statistical agency showed.

The latest drop was mainly driven by a reduction in food inflation, which stood at 9.24 percent in February, down from 10.72 percent the previous month.

However, non-food inflation showed an upward trend, increasing to 9.38 percent in February from 9.32 percent in January, indicating that services continue to put pressure on household budgets.

"The easing of inflation reflects the increased supply of commodities in the kitchen market," said Prof Selim Raihan, executive director at the South Asian Network on Economic Modeling, a think tank.

The availability of winter vegetables and certain spices has played a positive role in the commodity market, contributing to reductions in food inflation, he said.

"This situation clearly shows what we have been saying for a long time—that supply-side issues are a major driver of our inflation," Raihan said, adding that such problems could not be addressed solely through monetary policy.

However, he remained unsure about the trend, saying inflation above 9 percent is still very high.

"I am still not confident that inflation has declined due to policy measures. The seasonal effect will fade, and prices may rise again," he said.

"Once the seasonal supply diminishes, market prices will increase unless we address the fundamental causes of inflation and ensure proper coordination between monetary policy, fiscal policy, and market supply," he warned.

According to Raihan, the decline in inflation has been marginal.

"If you look at major commodities such as rice, lentils, oil, chicken, beef, and fish, prices have not decreased. In some cases, they have even increased," he said.

"From this perspective, I am not confident that we are taking enough steps to combat inflation."

However, Ashikur Rahman, principal economist of the Policy Research Institute of Bangladesh, believes that the government's contractionary monetary policy has played a role in this reduction.

"The contractionary monetary policy, along with a significant jump in imports, has played a role in easing inflation," he said.

There was a significant increase in imports during December and January, he said, adding that the relaxation of import policies over the past three months has shown good results, reducing supply chain disruptions.

"Now, Bangladesh Bank may not have strong justification to further raise policy rates. If this trend continues, we might see a slight reduction in the policy rate by June," he said.

Currently, the policy rate stands at 10 percent. In the last monetary policy statement, the central bank refrained from any further hikes after witnessing a declining trend in inflation since December.

However, Rahman warned that electricity supply remains a major challenge ahead.

"If the electricity supply remains stable and agricultural output performs well, keeping inflation below double digits would be a positive outcome."

So, the government needs to effectively manage supply chain disruptions and ensure stability in the power sector to improve the overall situation, he said.​